Investing.com UK - Financial Markets Worldwide
⚠ Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

FTSE 100: Heightened Risk Of Pullback

ByThierry Laduguie
Published 26/01/2015, 08:05
UK100
-
CL
-

Today the FTSE is down following the Greek election result and the second timing indicator, 13-day BTI, has become overbought. The risk of a pullback has increased significantly because the Top 20 Differential is also overbought. The election result sent the euro tumbling, crude oil is declining too. The anti austerity party Syriza won the election and people in Europe are concerned Syriza's victory could lead to renewed instability in Europe. As a result stock markets in Europe will open lower.

The market is still under the influence of the ECB's stimulus package announced last week, I suspect it is the main reason why we are not seeing a bigger drop this morning and I would not be surprised if the FTSE rallies later in the day. But the timing indicators are overbought and in this situation the FTSE is likely to pullback in the next few days. Also we are seeing renewed tensions in Ukraine, if the violence escalates the situation will unnerve investors and the stock market will fall. So there are downside risks right now, the best trade is to go short as high as possible.

Since making a low at 6298 the FTSE has rallied without interruption. The index has closed up each day since 14th January. Based on past pattern the FTSE is now overbought, this means it's not the best time to go long. Indeed, the risk of a pullback has increased significantly and the question this morning is: is today's pullback the start of a longer decline or a pause in the uptrend? If it's a pause then the the decline will start from higher levels.

FTSE 100: 120 min chart

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.